Along with the renewal form and payment, documents required for license renewal include:
- Any unfiled MSA documents Licensed Distributor Reporting Form (DR 1285) or Tobacco Distributor's Certificate of Exemption (DR 1286)
- Any unfiled tax returns
- Payment of outstanding debt(s) due to the department
- A valid sales tax license.
Colorado tobacco products distributors must file a Tobacco Products tax return electronically each quarter. The return must be filed and the payment, which is required to be made by Electronic Funds Transfer (EFT), must be submitted by the 20th day of the month following the reporting quarter.
Distributors must file a return even if no tax is due for that quarter. The amount paid to the department may be reduced by 1.665%, through December 31, 2020, of the tax due to cover the distributor's expense in the collection and remittance of the tax (discount), if the payment is submitted by the due date. Effective January 1, 2021, the discount rate is 0.96% for tobacco products that are modified risk tobacco products, is 0.6857% for tobacco products that are not modified risk tobacco products. The discount rate for moist snuff varies depending on if the minimum moist snuff tax applies.
Tobacco Products Distributors are also required to file Master Settlement Agreement (MSA) reports monthly or annually. For more information on MSA reporting, see the Master Settlement Agreement Reporting web page.
In addition, distributors who sell roll-your-own and smokeless tobacco into Colorado are required to file PACT Act registration and submit PACT Act reports by the 10th of each month.
For questions on filing requirements, contact the Excise Tax Unit.
Exemption and Credits Claimed on the Tobacco Products Tax Return
Exempt sales (line 2), credits for tobacco products exported to out-of-state retailers (line 6), credits for tobacco products exported to out-of-state consumers (line 7), credits for tobacco products returned to the manufacturer (line 8) and credits for tobacco products destroyed (line 9) must be claimed based on the manufacturer's list price, not the sales price.
Credit for Tobacco Products Shipped to Out-of-State Consumers
Tobacco product distributors are allowed to claim a credit for tobacco products shipped or transported to out of state consumers between Sept. 1, 2015 and August 31, 2018 and January 1, 2021 and later. These sales can be claimed on line 6 of the third quarter 2015 through third quarter 2018 and first quarter 2021 and later Tobacco Products Tax Returns. If you are eligible for the credit but did not claim it on your returns, you can file amended returns to correct your filings. After amending your return, complete and submit a Claim for Refund (DR 0137), along with supporting documentation to the Excise Tax Unit.
For Tobacco Product tax returns, distributors are required to keep true and accurate records of their activities for at least three years after filing their returns. For Master Settlement Agreement (MSA) reporting, distributors must keep their records for at least five years.
Federal law under the PACT Act states that distributors selling cigarettes, electronic nicotine delivery systems (ENDS) or tobacco products in interstate commerce, into Colorado are subject to a number of registration, labeling, delivery, tax, reporting and record-keeping requirements including registering and reporting under the PACT Act. For more information, visit the PACT Act Requirements web page.
Due to the passage of the 2012 federal highway bill (MAP-21), any person who makes available to consumers a machine capable of making tobacco products such as cigarettes is considered a manufacturer on the Federal level and must be licensed by the Tobacco and Trade Bureau. Once federal requirements have been met, the owner must certify the product through the Attorney General's office. Once certification is approved, please contact the Excise Tax Unit for more information.
Credits are allowed for tax paid on tobacco products (claim on the Tobacco Products Tax Return) when:
- Shipped to retailers outside of Colorado for sale by those retailers
- Shipped to consumers outside Colorado between Sept. 1, 2015 and Aug. 31, 2018 and January 1, 2021 and later.
- Returned to the manufacturer
- Destroyed by the distributor
A Claim for Refund (DR 0137) must be submitted, along with supporting documentation, to request a refund.
In addition, the department shall give credit for taxes paid on tobacco products that are bad debts. The credit is prohibited unless the bad debt has been charged off as uncollectible on the books of the wholesaler. The wholesaler will be required to repay the credit if payment is received for the bad debt subsequent to receiving the credit. A distributor must amend their Tobacco Products tax return for the period where the bad debt occurred, and form DR 0137 must be submitted for a refund to be issued.
Overpayment on tax from prior periods requires an amended tobacco products tax return and form DR 0137 to be submitted with supporting documentation.
Send the Claim for Refund, along with supporting documentation, to the Excise Tax Unit.